Question
Barbara is considering investing in a company's stock and is aware that the return on that investment is particularly sensitive to how the economy is
Barbara is considering investing in a company's stock and is aware that the return on that investment is particularly sensitive to how the economy is performing. Her analysis suggests that four states of the economy can affect the return on the investment.
Probability | Return | |
Boom | 0.1 | 25.00% |
Good | 0.2 | 15.00% |
Level | 0.1 | 10.00% |
Slump | 0.6 | -5.00% |
A) Use the table of returns and probabilities above, to determine the expected return on Barbara's investment? (Round answer to 3 decimal places, e.g. 0.076.)
B)Use the table of returns and probabilities above, to determine the standard deviation of the return on Barbara's investment? (Round intermediate calculations and final answer to 5 decimal places, e.g. 0.07680.)
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